Investors took a long-term view of Nigeria’s macroeconomic stability yesterday, staking about N1.86 trillion on a N1 trillion auction for the Nigerian Treasury Bills (NTBs).

More than 89 per cent of total subscription were for the longest-tenored one-year or 364-day instrument in transactions that both underlined the attraction and shift to fixed-income securities and confidence in the country’s political system.

The Central Bank of Nigeria (CBN) had on behalf of the Federal Government offered three tenors of NTBs- N100 billion each for 91-day and N182-day securities and N800 billion for 364-day instrument, totaling N1 trillion.

Investors however showed strong preference for the 364-day instrument with a total subscription of N1.66 trillion, an oversubscription of 107.5 per cent. The lowest-tenored 91-day instrument recorded total subscription of N129.69 billion, representing an oversubscription of about 30 per cent. The 182-day instrument was undersubscribed with total subscription of N70.22 billion.

With the oversubscription, the CBN increased its offer size by about 50 per cent to issue out a total of N1.49 trillion NTBs, including N129.32 billion of the 91-day bills, N70.17 billion 182-day instrument and N1.29 trillion of 364-day securities.

Experts said the overwhelming subscription to the issuance reflected the attractiveness of the securities and investors’ confidence in the ability of the government to sustain its reforms, especially in the foreign exchange (forex) market.

The experts were however cautious that while the shift to government-issued short-term instrument underlined government’s capability to bridge budget deficits, there were concerns about possible negative crowding out effect on the private sector.

Managing Partner, Biodun Adedipe and Associates, Prof Biodun Adedipe, said yesterday’s auction trend was a testament to investors’ confidence in the President Bola Ahmed Tinubu’s government.

According to him, investors have come to appreciate the commitment of the current government to reforms, with several fiscal and monetary changes over the past three years.

He outlined that while the purpose of fund being raised, the repayment capacity of the issuer, commensurate return to risk and the liquidity of the tradable instrument are important factors to the subscription level, the longest-tenored preference was also a subtle show of confidence on Nigeria’s ability to successfully manage its electioneering system.

Managing Director, Arthur Steven Asset Management, Mr Olatunde Amolegbe said the substantial increase in the offer size showed that government was ramping up borrowing to meet budget obligations.

“The implications is that interest rate will rise in the short to medium term in the fixed income market while we could see a short term sell off in the equities market as portfolio managers reposition their portfolios. But this will provide new entry opportunities for those looking to come in,” Amolegbe said.

Managing Director, GTI Capital Limited, Mr Kehinde Hassan said the NTB auction was heavily oversubscribed because high yields, abundant liquidity and macroeconomic consideration converged to push investors toward government securities.

According to him, the 364‑day NTBs were heavily oversubscribed because investors were seeking safety and preferred to lock in elevated rates for longer.

“Rising stop rates have made NTBs one of the most attractive low‑risk assets available, prompting banks, pension funds and asset managers to channel excess liquidity into government securities rather than leave funds idle. This liquidity-yield combination naturally drives strong demand,” Hassan said.

(The Nation)

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